Senate Democrats' reversal on US stablecoin bill throws future of legislation into doubt

Days before the bipartisan GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) was set to hit the floor of the Senate, the future of the legislation has been thrown into question after nine Senate Democrats came out against the legislation in its current form. 

The group includes four senators who voted to advance the bill out of the Senate Banking Committee in March, according to Politico : Ruben Gallego (AZ), Andy Kim (NJ), Lisa Blunt Rochester (DE), and Mark Warner (VA). The Democratic co-sponsors of the bill, Kirsten Gillibrand (NY) and Angela Alsobrooks (MD), did not sign on to the statement. 

A statement released by the group said the current version of the bill has "numerous issues that must be addressed," namely, "adding stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don't meet the act's requirements." 

Republican Senator Bill Hagerty (TN), one of the bill's authors, emphasized the need for the legislation in response to the statement on X. "We have a choice here," Hagerty wrote . "Move forward and make any remaining changes needed in a bipartisan way, or show that digital asset and crypto legislation remains a solely Republican issue."

The bill would require stablecoins to have 100% reserve backing with U.S. dollars and short-term treasuries (or other similarly liquid assets), monthly public disclosure of reserves, and annual audits for issuers with more than $50 billion in market capitalization. The bill also lays out strict marketing standards, guidelines on insolvency proceedings, and other provisions. 

The bill will require 60 votes to pass in the Senate; with Republicans controlling only 53 seats, a bipartisan deal is a must. ""We're going to continue to work to improve [the bill]," Hagerty said when it advanced out of committee. Axios previously reported that Senate Democrats wanted more provisions around national security and law enforcement to be added to the bill. 

The territorial battle over stablecoin legislation, both in the halls of Congress and between lobbyists for various firms, has escalated in recent weeks as two bills — the GENIUS Act in the Senate and the STABLE Act in the House — have begun advancing towards a floor vote. Yet Democrats have raised concerns over how the legislation will govern President Trump and his family's crypto business dealings. 

"I'm deeply concerned that the President launched his own stablecoin," top House Democrat Maxine Waters said previously . "I negotiated with my colleagues across the aisle for the past three years to create a safe regulatory framework for stablecoins. Now, we are pushing legislation through as quickly as possible without considering some of the key issues that will impact American investors and consumers."